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Advantages and disadvantages of having an audit committee.

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Accounting, Business

Advantages and disadvantages of having an audit committee.

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  1. Best Answer


    MouMou on Mar 25, 2012

    Advantages:
    1. It provides an internal reporting mechanism compared to reporting to the directors who may wish to hide or amend unfavorable internal audit.
    2. Shareholder and public confidence in published fiancial information is enhanced because it has been reviewed by an independent committee.
    3. Provides better communication between the directors, the external auditors and management.
    Disadvantages:
    1. Fear that the purpose is to catch the management out.
    2. Non-executive directors being overburdened with details.
    3. Additional cost in terms of time involved.
     

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